Pensions and retirement

Flexible income drawdown

One option available to you at retirement is to take a flexible income drawdown directly from your pension pot. Find out below how a flexible income can suit your needs. 

Advantages of a Flexible Income

  • You can vary your income to suit your needs and are not tied in to an inflexible arrangement
  • You can keep your options open for the future
  • You may be able to receive a higher income, subject to the growth in your fund
  • You can choose if and when to buy a pension

Disadvantages of a Flexible Income

  • If you live a long time, you may outlive your pension pot
  • As your money remains invested, the remaining value could go up or down – meaning you could get back less than you invest
  • The amount of income you receive is not guaranteed
  • Withdrawals from your pension pot may affect the assessment of any Government means tested benefits 
  • As you get older you might find it more difficult to manage your finances

Pension Calculator

We have put together a defined contribution (DC) calculator that might help you in planning for retirement.
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Further information

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Retirement options

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One option available to you is to have a flexible income - taking it as and when you need it. There are two main ways you can do this.

Income Drawdown
Income Drawdown

You may choose to take a flexible income directly from your pension pot.

You can take payments out of the pot as and when you need them. Your pension pot stays invested, so its value can go up and down. The income received is taxed as normal although 25% of the initial fund can usually be taken as a tax-free lump sum.

As with the annuity service, Mercer's Pension Decision Service can facilitate income drawdown, on an advised basis, or you may select your own Independent Financial Adviser. Mercer can be contacted on 0800 280 2448. TPT was able to negotiate favourable terms for its members.

You could also transfer to another provider to utilise income drawdown or another flexible retirement option.

A Series of Cash Lump Sums
A Series of Cash Lump Sums

One further flexible option is to take your funds (including the tax-free cash element) in a series of slices.

In this case, you can take up to 25% of each slice tax-free, with the remainder subject to tax at marginal rates.

This option is known as a Multiple Uncrystalised Funds Pension Lump Sum.

You will need to transfer to another provider to utilise this option.

At retirement

At retirement

Tax implications

Whole pot as cash

Retirement FAQs